The only way to fix Universal Credit is to scrap it altogether

"The centring of the 'principles' of Universal Credit contributes to a Westminster delusion about this dumpster fire."

Friday, 15 December 2017
9:29 AM

By Chaminda Jayanetti

Good intentions are the Fifth Amendment of politics – the fact you meant well is the defence to all questions about the disaster you oversaw. Perhaps we are so used to cynicism by politicians that any hint of principle deserves a let-off if it goes wrong.

The Universal Credit fiasco is the latest example. Rarely have we seen such a multi-dimensional meltdown as the roll-out of the government's flagship welfare reform.

The entire system is riddled with problems. Despite having been dreamt up a decade ago and built up since 2010, hardly any part of the programme is functioning as it ought. The Department of Work and Pensions looks wholly unfit for purpose. It is a train wreck.

What we keep hearing in response is that however badly the policy is going in practice, the 'principles' of it are sound. The whole shebang was well meaning, and therefore we must persist with it. If we all deny hard enough, things will sort themselves out.

We hear this from government ministers, rebellious backbenchers, think tanks, charities, even Labour. Barely an interview on Universal Credit is allowed to pass without the question, "but do you agree with the principles of it?"

The avowed principles behind Universal Credit are that it helps people keep more of their benefits when they find a job, and that it simplifies the benefits system.

The first principle is the one that people rally behind. It seems hard to argue against the principle that getting a job should be financially worthwhile.

But such an aim could have been met just by altering the in-work payments in the existing tax credit system – raising the level of job-related earnings at which tax credits start to be withdrawn, and slowing the pace at which they are withdrawn.

Instead the government did the opposite. George Osborne cut the money paid to Universal Credit claimants when they return to work – leaving them worse off than they were under the old system.

So the first principle neither requires Universal Credit, nor is achieved under it. The second principle, however, is where the real problems lie.

Simplicity for its own sake is an earth-scorching crusade. Bulldozing central London into a cross-grid street pattern would be madness. Imposing simplicity upon natural complexity uses a sledgehammer to neatly divide a nut.

It is true that our benefits system is complex. But benefits are complex because society is complex.

Take Housing Benefit. This has been merged into the new Universal Credit payment, wreaking havoc in the process. Rent arrears have rocketed because the government chose to delay initial payments and then make them to the tenant rather than the landlord.

But even putting this aside, Housing Benefit had always been kept separate from the rest of the benefits system for a simple reason – it is paid to households, whereas other benefits are paid to individuals.

But Universal Credit chucks in housing payments with everything else – one payment going to the ‘head’ of the household. This puts women in abusive relationships in a bad place. All the money for childcare, which once would have gone to her, is liable instead to go to the abusive partner. Financially it is harder for her to be independent and harder for her to leave. Applying to the government for benefits to be paid straight to her would simply alert the abusive partner to her attempts to escape his control. All in the name of ‘simplicity’.

Then there is debt. Both Housing Benefit and tax credit payments are based on a prediction of how much money a person (or household) will earn. If they earn more than expected, the government can reclaim some of the ‘overpaid’ benefit from future benefit payments. It is a messy system that can cause real hardship, but it is at least limited to those specific payments.

Under Universal Credit, all these benefits and debts are merged into one – and nobody knows what’s going on anymore. Claimants across the country find their payments being arbitrarily cut month in, month out, with no explanation. Random debts are imposed and retrieved with minimum information. Claimants, already living on a shoestring, often have no idea how much money they will receive from one month to the next. It is a farce.

If the government really wants to simplify the benefits system, it should address the other great source of complexity and impenetrable form-filling – the immense conditionality attached to benefits, introduced by successive governments to micro-manage both eligibility for state support and the lives of those who receive it.

Instead, Universal Credit threatens to extend conditionality to people who are already in work – adding more bureaucracy and most likely not saving a penny in the process.

The centring of the 'principles' of Universal Credit contributes to a Westminster delusion about this dumpster fire. By focusing on the avowed principles – 'making work pay' and 'simplicity' – it paints this as a noble attempt to improve the lot of the low paid that has failed in its implementation, rather than a pernicious scheme that has failed because it is a terrible idea.

We end up with a debate that pretends that tweaking the system will save it. The Budget measures to bring down rent arrears will probably succeed – but because they are based around loans, they trade debt now for debt later.

Labour's own demands – to 'pause and fix' Universal Credit – give the game away. The party's (valid) demands would in fact render the new system little more than an expensively and chaotically Photoshopped facsimile of the original, with claimants having the right to receive their benefits on similar terms as under the old system.

So why keep the new system at all, when it hasn't yet been fully rolled out?

Most likely, because of the politics of politeness. We cannot call this for what it is because it would traduce the good intentions of those behind it. We must pretend this is simply a good idea that needs tweaking. And once we have accepted this pretence, it logically follows that these 'tweaks' are all that are needed.

Fearing the embarrassment of a reversal, the DWP is so determined to make its monster work that any suggestion the scheme be scrapped is out of the question - so backbench critics dare not ask the question, and Labour dare not ask the question, and think tanks and charities trying to get a hearing in Whitehall dare not ask the question.

Why are we still doing this? Because in the corridors of power, it's rude not to.